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eBay spins off Skype

Chris Jenkins (MIS Australia) | April 15, 2009
eBay chief John Donahoe says there are "limited synergies" between Sykpe and eBay

SYDNEY, 15 APRIL 2009 - Online auctioneer eBay will spin off internet phone service Skype in a share market float it hopes will help it renew focus on its core marketplace business.

eBay plans to float Skype through an initial public offering scheduled for the first half of next year.

The move comes just days after eBay sold online recommendation engine StumbleUpon back to its founders for an undisclosed sum.

eBay bought Skype for $US2.6 billion in 2005 but has struggled to fit the voice and video calling service with its mainstream ecommerce products. But eBay wrote down Skype's value to $US1.2 billion in 2007.

In a statement, eBay chief executive John Donahoe said there were "limited synergies" between Sykpe, eBay and eBay's payment service PayPal.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," Mr Donahoe said in a statement.

eBay has previously predicted that Skype would generate $US1 billion in revenue by 2011, compared to $US551 million last year.

Last week The New York Times reported that Skype founders Niklas Zennstrom and Janus Friis had approached private-equity groups about buying Skype.

Skype has more than 405 million users, compared to the 53 million it had when eBay bought it, the newspaper reported.

Renaissance Capital analyst Paul Bard told Bloomberg the Skype float could raise between $US500 million and $US1 billion for eBay.

"The numbers on the business have been phenomenal," Mr Bard said. "I think there would be substantial investor interest."

 

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